April 20, 2016 – Canada’s budding legal marijuana market requires federal-provincial cooperation in order to succeed, according to a new C.D. Howe Institute report. In “Joint Venture: A Blueprint for Federal and Provincial Marijuana Policy,” author Anindya Sen argues that the federal government should retain powers over health and safety regulations, and provinces should have the freedom to design their own distribution systems.

“I believe that our governments’ priority should be the protection of public health and the elimination of existing and future black markets. Other concerns, such as raising as much provincial and federal tax revenue as possible, should be considered secondary,” commented Sen. “For this reason, our governments should learn from the experience of regulating tobacco, which has a thriving black market, so that they avoid a repeat of this experience.”

The author makes the following recommendations for an efficient and sustainable framework for legalized marijuana:

Responsibility for defining production and supply regulations and permissible limits of marijuana consumption should be with the federal government, for the same reason that Health Canada regulates other drugs and food safety. This would enable efficient monitoring and facilitate the implementation of policies that might be necessary to regulate supply. As with tobacco, the federal government should establish penalties for illegal trafficking and production, while provinces should have discretion over setting penalties for the purchase and sale of marijuana to minors.

Provinces should design their own distribution systems with the primary objective being protecting public health and limiting black market sales, and the secondary objective being preventing uncompetitive concentration of suppliers.

Both federal and provincial governments may levy sales taxes of various types on marijuana: the federal government should focus on suppliers and the provinces should focus on retailers.

The C.D. Howe Institute is an independent not-for-profit research institute whose mission is to raise living standards by fostering economically sound public policies. Widely considered to be Canada's most influential think tank, the Institute is a trusted source of essential policy intelligence, distinguished by research that is nonpartisan, evidence-based and subject to definitive expert review.

For more information contact: Anindya Sen, Professor of Economics and Director of the Master of Public Service Program, University of Waterloo; Benjamin Dachis, Associate Director, Research, C.D. Howe Institute; 416-865-1904, or email: kmurphy@cdhowe.org